Households refuse to pay power bills

23:10, Sep 07 2009

Power companies are chasing millions of dollars of debt as customers struggle to meet the rising cost of electricity.

One residential customer owes more than $13,000, while Work and Income is handing out more benefit advances and emergency grants to help low-income customers pay up.

At the same time, disconnection rates have plummeted as companies tread carefully to avoid a repeat of the public relations nightmare Mercury Energy faced after Folole Muliaga's death in 2007.

Mrs Muliaga died after a Mercury Energy contractor cut power to her home in Mangere, Auckland, because of an overdue bill, turning off the mains-powered oxygen machine which helped her breathe.

High prices, a crashing economy and dwindling disconnections have combined to create a new problem  soaring debt.

The amount residential customers of Meridian Energy owe more than doubled between May 2008 and July this year, from $3.69 million to $8.16m.

Many customers say they are struggling to afford the 72 per cent rises in power prices during the past eight years, combined with the financial pressures of the past 12 months.

Work and Income paid out 36,600 benefit advances to help people cover their power bills in the year to June  6500 more than the previous year. The agency also paid out about 1000 more emergency grants of up to $500 for power bills, a spokesman said.

But some customers have cottoned on to the fact that disconnection is now a last resort for power suppliers, letting power bills rack up while they deal with other priorities.

After 4154 disconnections for debt in 2006, Meridian carried out only 30 last year and has cut off only 74 customers this year.

Mercury Energy performed a fifth of the disconnections last year that it did in 2006, and had seen debt rise by $1.6m since 2007, a spokeswoman said. Some customers owed $10,000 or more, with one Mercury customer owing $13,718.

Contact Energy had also had an increase in debt, a spokesman said.

Genesis Energy refused to disclose its debt levels or highest debtors because it "may indicate that such a debt balance is tolerated".

In May, the Government warned energy companies against further price rises after the Commerce Commission found generators used their market power to gouge users by more than $4 billion.

But Energy Minister Gerry Brownlee said the high levels of consumer debt were a symptom of the general economic climate.

"The best approach is for power companies to manage their relationships with customers with goodwill."

Consumer NZ adviser Paul Doocey said the jump in debt could be because high power prices, economic crisis and a dropoff in disconnections had all struck around the same time.

"If power companies are not cutting people off as quickly, it stands to reason that people are delaying paying their bills.

"It used to be you couldn't ignore it, you had to pay or go without, but now people have been able to rack up these huge bills."

Mr Doocey said it was inevitable that Work and Income had been giving out more emergency payments.

"I don't know about you but if I was on a benefit I'd have about enough for rent and power and that would be it."

But the stress of high power prices is still causing concern, as those on tight budgets juggle bills, rent and food prices.

Electricity and Gas Complaints Commissioner Judi Jones said her staff had fielded 50 per cent more calls this winter than last, but they were often powerless to help.

"Anyone who's faced a bill of $800 or more, that's quite a lot to deal with, but if it's just high because you've used a lot of electricity, there's not much we can do."


The Dominion Post